Taking the pain out of accounting and payroll for small businesses, ScaleFactor raises $10 million

ScaleFactor, the Techstars alumnus that’s selling accounting and payroll management software as a service, has raised $10 million in a new round of funding as it looks to scale up its sales and marketing efforts.

Founded by longtime accountant, Kurt Rathmann, the Austin-based company has created a software service that collects and analyzes data from point of sale systems, bank accounts, credit cards and billing systems, to automate recordkeeping and payroll functions.

Rathmann, a former KPMG employee, started ScaleFactor after seeing the lack of innovation in the backoffice functions that are really the engine of any small business.

“Around the tech stack, accounting and financials were lacking the most,” Rathmann says. So he left his job at KPMG and started ScaleFactor Consulting out of his garage in Austin in 2014.

After a few years of basically going door-to-door (a throwback to Rathmann’s first company as an 18-year-old selling outdoor lighting in suburban Dallas) to find out what small businesses needed from an accounting software solution, ScaleFactor developed the API toolkit and management software that would become the services it’s pitching today.

After graduating from TechStars’ Austin accelerator, the company was able to nab $2.5 million in a seed financing round that included TechStars Ventures, NextCoast Ventures, and two Kansas City-based investment firms — Firebrand Ventures and Flyover Capital.

While the initial services business holds a lot of value and has managed to attract scores of small businesses, both Rathmann and his new investors led by Canaan Partners and including Citi Ventures and Broadhaven Capital see bigger opportunities down the road for ScaleFactor.

With the window that the company has into the operations of small businesses around the country, ScaleFactor can serve as an unimpeachable source of information for small business lenders.

With insight of (and control over) payroll management, billpay, cash approvals, cash accounting, and an ability to project forward cash flows (along with invoicing and tax management for part time employees), ScaleFactor will be able to offer lending services to smooth bumps in a company’s progress. 

“Bookkeeping and accounting is really the nucleus,” says Michael Gilroy, a principal with Canaan Partners. 

While Square has moved into lending services (and now is on the hunt for a banking license) through its window into a company’s revenues through point-of-sale devices, a company like ScaleFactor has a more holistic view of the health of a business, says Gilroy.

Equipped with that information ScaleFactor software can do things — like prompt business owners of the revenue targets they need to hit each month or suggest lending options to cover shortfalls — that better equip business owners to handle disruptions. 

“With our foundation established, a big part of our Series A is how do we power the business owner past bookkeeping & accounting? We see many opportunities to help further and our next steps will include things like lending, payments and many other activities that take a business owner/operators focus away from driving their business forward,” Rathmann wrote in an email.

TMGcore is running high-efficiency crypto mines in Texas

Out on the plains of East Texas, not far from Dallas, a company called TMGcore is mining crypto. The company, funded to the tune of $70 million, will be mining multiple cryptocurrencies and is using some unique technology to ensure that it doesn’t eat up an entire city’s worth of energy.

“TMGcore will be one of the first companies to utilize 3M’s Novec fluorochemical coolant at the heart of an enterprise scale cryptocurrency mining apparatus,” said CEO JD Enright. “The company’s intelligent mining system uses a Two Phase Liquid Cooling Immersion technology to dramatically decrease cooling costs by up to 90% and lets the company conduct mining operations from anywhere, including the middle of hot and muggy Texas. TMGcore also employs dynamically intelligent mining software that automatically mines the most profitable coin based on realtime market value and difficulty of access for the most profitable deployment of resources in realtime. Our technology is first-to-market and delivers a transformative approach to crypto mining that stands to fundamentally disrupt the market.”

The goal is to create mining infrastructure in the US and to prevent overseas control of the various currencies.

“Giving America a seat at the table is our #1 goal here at TMgcore. Our cooling technology and efficient mining rigs open up more regions of this country to house this type of operation,” said Enright.

The mine is housed in Plano, Texas inside a 150,000 square foot facility and is capable of a “100 megawatt live power load.” Further, the company is running custom ASIC chips increase board density and reduce mining costs significantly. In short, it will be one of the highest tech mining facilities in the world.

From the release:

The company has developed a unique use case with a fluorochemical coolant that delivers smart, safe and sustainable cooling for industrial technology operations. TMGcore will be one of the first companies to utilize this compound at the heart of an enterprise scale cryptocurrency mining apparatus. The company’s intelligent mining technology uses a Two-Phase Liquid Cooling Immersion technology to dramatically decrease cooling costs by up to 90%. The system also dynamically adapts its mining efforts toward the most profitable token at any given time, factoring in real-time market price, the difficulty of access and hash rate. TMGcore has also developed custom-made ASIC mining boards that result in a 20% increase in token output.

“Leveraging the magic of this coolant and groundbreaking mining circuitry, we saw a massive opportunity to capitalize on the nascent and highly lucrative mining industry in a physical, tangible and industrial fashion,” said Enright. “TMGcore seeks to deconstruct the mining monopoly in other countries with an American-made, U.S. driven approach that not only pushes the blockchain ecosystem forward but also creates job opportunities for Texas’ fast-growing technology community. We understand the importance of the research and development that creates not only innovations but the efficiencies that support the blockchain industry on a global scale.”

“Texas, more so than many other states in this country, has an abundant supply of energy available on their grid with available real estate to house such a project,” said Enright. “Cryptocurrency mining has not really been able to take advantage of Texas’ energy supply to date because the state is too hot. By utilizing Novec in this Two Phase Liquid Cooling Immersion technology, we have unlocked Texas’ potential to mine for the first time.”

Here are the top states and cities for startups in the South

The American South may not be the first region that comes to mind when you hear the phrase “hotbed of tech entrepreneurship,” but, slightly misguided perceptions aside, it’s home to a diverse and growing collection of startups.

Here, we’re going to take a deep dive into the startup funding data for the region.

What is “the South?”

Just like it’s a common pastime for many city dwellers to argue about the precise boundaries of neighborhoods, there’s often some disagreement about the exact contours of the U.S.’s various regions. To quash rabble-rousing from the get-go, we’re using the U.S. Census Bureau’s definition of “the South” on its official map of the United States. Below, we display a map of the states we’re going to look at today.

Much like barbecue, the South is not a monolithic concept. So to incorporate some regional flavor into the following analysis, we’re also going to use the same regional divisions that the U.S. Census Bureau uses.

By doing this, we’ll be able to get a better idea of the relative contribution states from each sub-region make to startup activity in the South overall.

The ebb and flow of deal and dollar volume

As is the case with most of the country, the South appears to be experiencing a shift in startup funding as we move toward the latter half of a bull run in entrepreneurial activity. The chart below shows a divergence in overall deal and dollar volume over time.

Much like in the rest of the U.S., reported deal and dollar volume are heading in different directions. Part of this may be due to reporting delays — it can sometimes take a few years for seed and early-stage rounds to get added to databases like Crunchbase’s . Nonetheless, there is a slow and generally upward creep in round sizes at most stages of funding. And that’s not just a Southern thing; it’s a country-wide trend.

Let’s disaggregate these figures a bit. We’ll start with deal counts and move on to dollar volume from there.

A closer look at southern venture deal and dollar volume

In the chart below, you’ll see venture deal volume broken out by sub-region.

Over the past several years, reported venture deal volume has been on the downswing. From a local maximum in 2014 through the end of 2017, it’s down almost 35 percent overall. But that’s not the whole picture. The relative share of deal volume has changed, as well.

Although it’s not immediately clear just by looking at the chart above, startups in the South Atlantic sub-region have accounted for an increasingly large share of the funding rounds. For example, in 2012, South Atlantic startups attracted 54 percent of the deal volume. In 2017, that grows to 64 percent. Startups in the West South Central sub-region have pretty consistently pulled in between 28 and 30 percent of the deals, so where’s the loss coming from? Startups headquartered in Kentucky, Tennessee, Mississippi and Alabama pulled in just 8 percent of deals in 2017, compared to 18 percent in 2012.

It’s a similar story with dollar volume.

In general, dollar volume follows the same pattern, albeit with a bit more variability. Regardless, startups in the South Atlantic sub-region are hoovering up an ever-larger share of venture dollars, and there’s little to indicate that trend will reverse itself any time soon.

Where are the regional hotspots for deal-making in the south?

Let’s see which states accounted for most of the deal volume. The chart below shows the geographic distribution of deal-making activity by startups in each Southern state from the beginning of 2017 through time of writing. It should come as no surprise that much of the activity is concentrated in states with higher populations.

And here’s the distribution of dollar volume among southern states.

Despite some variation in which states are at the top of the ranks, the share of deal and dollar volume raised by startups in the top three states is remarkably similar, coming in at between 52 and 53 percent for both metrics.

The top startup cities in the south

We started by looking at the South as a whole and then drilled into its sub regions and states. But there’s one layer deeper we can go here, and that’s to rank the top startup cities in the South.

In the interest of keeping our rankings fresh and timely, we’re covering activity from the past 15 months or so, from the start of 2017 through mid-March 2018. But before highlighting some of the more notable hubs, let’s take a look at the numbers.

In the chart below, you’ll find the top 10 metropolitan areas where Southern startups closed the most funding rounds.

The chart below shows reported dollar volume over the same period of time.

Much like we saw at the state level, the top five startup cities — ranked by both deal and dollar volume — are the same, although there’s some variation between where each one ranks. In order, the D.C., Austin and Atlanta metro areas rank in the top three for each metric, while Dallas and Raleigh, NC switch off between fourth and fifth place.

Startups capitalize on the nation’s capital

To be frank, Washington, D.C.’s top-shelf ranking was a bit of a surprise. It may be the fact that Austin, TX plays host to South By Southwest, a somewhat more relaxed culture and/or a preponderance of excellent breakfast taco and barbecue joints, but to many — ourselves included — the city feels like it would have a more active startup scene than the nation’s capital. But that’s not exactly the case. The D.C. metro area had more venture deal and dollar volume than Austin for seven out of the last 10 years, and startups based in the nation’s capital have raised more than twice as much money so far in 2018.

D.C.-area startups have recently raised some notable rounds. Just a couple of weeks prior to the time of writing, Viela Bio raised $250 million in a Series A round (in late February 2018) to continue funding research and testing of its treatments for severe inflammation and autoimmune diseases. And on the later-stage end of things, education technology company Everfi raised $190 million in a Series D round that had participation from Amazon founder and CEO Jeff Bezos, former Alphabet executive Eric Schmidt and Medium CEO Ev Williams. Other D.C. companies, including Mapbox, Upside.com, Afiniti and ThreatQuotient, have all raised late-stage rounds within the past 15 months.

Startup ecosystems in Southern cities may pale in comparison to places like New York and San Francisco, but it wouldn’t be wise to discount the region entirely. A large number of interesting companies call the lower half of the Lower 48 home, and as the cost of living continues to rise on the east and west coasts, don’t be surprised if many current and would-be founders opt to stay down home in the South.

CEO Oscar Munoz Issues Further Apology, Saying United Needs to ‘Do a Much Better Job’

(DALLAS)—United Airlines’ profit plunged 69% in the first three months of the year, and that was before the terrible publicity surrounding the dragging of a bloodied passenger off a plane.

The cost of fuel, labor and maintenance all rose sharply in the first quarter, helping push United’s profit down to $96 million, despite higher revenue.

The results released Monday beat Wall Street expectations, however. United performed better by other measures—more cancellation-free days, fewer lost bags.

The power to raise prices was also swinging United’s way. A key revenue-per-mile figure was flat, adding to evidence that a two-year decline in average fares is over. United expects the revenue-per-mile figure to rise by 1% to 3% in the second quarter.

It is unclear whether last week’s incident in which Chicago airport officers dragged a 69-year-old man off a United Express plane will halt United’s progress.

CEO Oscar Munoz issued another apology Monday.

“It is obvious from recent experiences that we need to do a much better job serving our customers,” Munoz said in a statement. He said the company is “dedicated to setting the standard for customer service among U.S. airlines.”

While the April 9 United Express Flight 3411 made headlines all last week, it has had little effect on United’s stock. United Continental Holdings Inc. stock fell about the same as shares of Delta, Alaska and JetBlue last week.

Ahead of its report, United led a rally in airline stocks Monday. The Chicago-based company’s shares rose $1.70, or 2.5%, to close at $70.77. After the financial results were released, the shares gained another 73 cents in after-hours trading.

Excluding non-repeating items, United said first-quarter profit was 41 cents per share. Wall Street expected 38 cents per share, according to a FactSet survey of 16 analysts.

Revenue rose 3% to $8.42 billion, also topping forecasts. But operating costs jumped 8%, driven by a 28% increase in fuel, a 7% rise in labor, and a 13% in maintenance and repair expenses.

Airlines are prospering from travel demand that remains relatively strong. Reduced competition — several major airports are dominated by one or two carriers — may limit United’s financial fallout to the dragging incident.

Seth Kaplan, managing partner of industry newsletter Airline Weekly, said one-time events rarely have a lasting impact on an airline’s revenue. He said a few travelers with options might try another airline, but United loyalists will be pragmatic and take a longer view — and United has been making impressive strides.

“They are more punctual, they’re losing fewer bags,” Kaplan said. “But it takes some time for the perception to catch up with the reality. This resets the clock. It was the last thing they needed.”

Cowen and Co. analyst Helane Becker said Monday that investors should be concerned if the incident leads to more government regulation of the airlines.

United has said it is examining policies including booting passengers off sold-out flights, and has promised a complete review by April 30. It has already taken some steps, including requiring that crew members flying to assignments book flights at least an hour early. Had that policy been in place on April 9, it might have averted the need to remove four passengers to make room for Republic Airline employees on their way to staff a United Express flight the next morning.

Besides the damage to United’s reputation, investors are nervous that airlines are planning to add too many flights, undercutting the recovery in prices.

United will increase domestic service this summer, adding some new routes and offering more-frequent flights on others. Munoz has defended the expansion as necessary to fill gaps in United’s route map that were created when the airline was shrinking.

United executives planned to discuss the first-quarter results with analysts and reporters on Tuesday.

A radio signal hack is what made those Dallas warning sirens go nuts

 When outdoor warning sirens in Dallas cried wolf last Friday, Twitter sleuths concluded that a hacker hijacked the alarms through a vulnerable computer network. As it turns out, the sirens aren’t computerized at all — they’re controlled through a decade-old radio system, one the city just voted to spend $100,000 to upgrade.

System malfunction with City of Dallas siren… Read More

T-Mobile “ghost calls” clog 911 and may have led to baby’s death

On Saturday night in Dallas, Texas, a six-month-old baby boy named Brandon Alex died after the child’s babysitter was unable to reach 911 from a T-Mobile phone.

At the very same time, the Dallas 911 call center was overwhelmed by “a spike in calls” due to what has become known as “the ongoing T-Mobile ghost call issue,” a Dallas city government announcement said Tuesday. Police are reportedly investigating whether the 911 problem led to the death.

Just days before Alex’s death, a local man named Brian Cross died after it took 20 minutes for his husband, David Taffet, to reach 911. “Taffet called 911 and was disconnected. He called back and was put on hold,” The Dallas Morning News reported. Paramedics arrived quickly after Taffet finally reached a 911 dispatcher, and Cross was taken to a hospital, but died within an hour.

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Amazon’s online grocery delivery service hits Dallas

AmazonFresh truck Amazon may be experimenting with how to take on grocery stores via its own drive-in pick-up locations, but in the meantime, the company is still working to expand its online grocery shopping service, AmazonFresh. Following the recent price drop to $14.99/month for Prime members – a more palatable charge than the earlier $299/year, AmazonFresh has today set up shop in Dallas, Texas and… Read More

Servers.com Brings Its Bare-Metal Servers To The US

servers Servers.com, a hosting company with a focus on dedicated bare-metal servers that launched in Europe in 2005, today announced the opening of its first U.S. data center location. The new Dallas data center currently only offers dedicated servers, but it will soon also play host to Server.com’s shared cloud hosting servers, too. Read More